Monday, March 03, 2008

Credibility Watch

FOMC participants project that the growth in economic activity should moderate to a pace close to that of the growth of potential both this year and next. Should that moderation occur as anticipated, it should help to limit inflation pressures over time...the economy should continue to expand at a solid and sustainable pace and core inflation should decline from its recent level over the medium term...our baseline forecast is for moderating inflation.

With long-term inflation expectations contained, futures prices suggesting that investors expect energy and other commodity prices to flatten out, and pressures in both labor and product markets likely to ease modestly, core inflation should edge a bit lower, on net, over the remainder of this year and next year.

Higher costs for such basics as food and energy left wholesale inflation rising at the fastest pace in a quarter-century...Over the past 12 months, wholesale prices rose by 7.4 percent, the largest yearly gain since late 1981...Core wholesale inflation, which excludes food and energy, posted a 0.4% increase, the biggest increase in 11 months and double what analysts had expected.

12 Comments:

It is time to start the collection of quotes from Paulson, Bernanke and maybe even W on inflation, the mortgage/real estate situation and the overall Innovative slice and dice credit market.

Didn't P or B say the mortgage mess was "contained" about a year ago? Indeed, is inflation contained or are they trying to contain the expectation of inflation?

The small-but-popular bakery near us reported Saturday that eggs have doubled in 13 months and flour (all types) has doubled as well. And this is before the spike in the price of hard spring wheat (crusty breads) from $8.50ish in early January to a peak over $24 in late February filters through into flour.

The owner has raised retail prices 11% while hoping prices of eggs and flour will come down in the spring but the pain is evident (profit is thin to nothing; bills are stacking up). My view of the future portends moderation from the $24 peak mentioned above but not a drop to $5 without some significant financial event.

As the owner said: Who wants to buy a $6 muffin?

Good News!I see on the MGEX red spring wheat is down around $18. Bernanke was right. Inflation moderated already.

You know, this is the kind of reporting out major media sources need to be doing and pointing out. But do you think we'll see John Stossle (sp) point this out of Nightline or some other show? Yeah, right!!

Why do I feel that we still have far to go on this hard road before things get better? I wish I could be optimistic about it.

I see that Warren Buffet says that we are in a recession. When will the Republican powers that be (like Matalin on MTP who pretty much blames the media for people being so down on the economy) stop sniffing the glue and admit things suck? Oh I know - when Bush is out of the White House - especially if Obama or Clinton is president.

Ooops. Seems to me if we just "average" our pronouncements, that last quote will fall off the list as something of an outlier. There. I'll be home awaiting the letter appointing me Fed Reserve Chairman.

i don't know what everyone expected. GWB took down two companies, then dad bailed him out and funded his share of the Rangers >> 1/29th, so the damage he could do was limited. Then, dad helped to the presidency where the damage he could do was unlimited. So he succeeded -- wildly.

For some time now I've wanted to record the first 5-10 minutes of the TV news for each day, sans ads, for about a year or so, then play it all back in one sitting and watch the 'truth' morph into BS. Mr Cunning has done something like that to some degree. I love it.